21 SEPTEMBER, 1917: Tried Teamwork?

A century ago, Costa Rica severed diplomatic relations with Germany. This didn’t make a lot of difference to the First World War. Costa Rica didn’t actually declare war on Germany until the following May, its tiny army was still preparing for action when the War ended and becoming a belligerent made no substantial difference to the country’s economic position. So why did Costa Rica bother to get involved? The answers to that question are straightforward enough, but only when taken in the context of South American geopolitics during the early twentieth century – so here’s a slice of very general context.

Most former colonies of Spain and Portugal had gained their independence during the early nineteenth century. Most had come into being because their former colonial administrators had broken ties with feeble European governments to seize control for themselves, and most had been involved in long, expensive wars of independence that left the new republics in a state of economic and political disarray.

For several decades, most Latin American ruling elites lived in fear of European re-conquest while seeking to develop transatlantic trading links. As they found markets for raw materials and agricultural produce in Europe and the USA, increased prosperity brought rapid socio-economic development in and around the coastal areas that had served as colonial trading hubs. This developmental spurt had relatively little impact across vast swathes of the interior, which remained poor, relatively lawless and politically ill-defined – fertile ground for rebellions and border disputes. Development also came at an economic cost, encouraging large-scale loans and investment from Europe (and, as the century grew old, the US) that left most of the continent’s governments heavily in debt and left increasingly important export sectors dependent on the whims of European and US markets.

The trade boom fed the rich, inflation starved the poor… general strike in Sao Paulo, 1917.

From about the 1880s, the process of ‘Europeanisation’ accentuated the social divisions and tensions promoted along these fault lines of inequality. When framing more stable and prosperous futures for their fledgling republics, ethnically European ruling elites turned naturally for inspiration towards Europe, and particularly towards the ‘socially successful’ liberal democracies of Britain and France.

Major cities, particularly in the southern republics, were self-consciously modelled on their European counterparts, maintaining strong cultural and communications links with the European world, and as part of a generalised tendency to compete aggressively with ethnic cultures considered inferior, Europeans were encouraged to follow the money and emigrate to the up and coming continent, the ‘new Europe’. Millions took up the offer in the decades leading up the First World War, with Spain, Portugal, Italy and Germany providing the biggest immigrant populations.

Clued-in as they were when it came to the latest strands of European news and ideas, Latin America’s ruling oligarchies shared the view that the first years of the twentieth century were a time of rapidly approaching, world-shaking change. Europe, it was felt, was heading for a conflagration that might threaten its place at the head of the world, and this prospect was generally viewed as an opportunity to advance their visions of modern, economically stable, independent states based on liberal (if racist) principles. On the other hand, over and above the need to address social, political and economic instability, they also knew what the expected European war could do for the imperialist ambitions – overt and growing, economic and geopolitical – of the western hemisphere’s emerging, aggressive and potentially dominant great power, the United States.

When European war erupted, all the Latin American nations immediately declared neutrality for essentially the same reasons as the USA: they had no formal obligations to the powers at war; they wanted to keep trading with both sides; and those with large European immigrant populations wanted to avoid trouble between them.

Maintaining neutrality was easier than coping with its effects. The dramatic flight of European money from the continent after August 1914, along with consequent crises in the import and export sectors, seemed to presage an economic slump that would leave the door wide open for dollar dominance of regional economies. By 1915 it was becoming clear that the opposite was true, as mushrooming demand for raw materials (Bolivian tin, Peruvian copper, Argentine meat and Chilean nitrates, to cite a few important examples) brought unprecedented wealth into Latin America – but the boom only pushed economies further into the grip of US interests, because rapidly expanding export sectors needed venture finance, and Wall Street was now its only available source.

Export boom and spiralling commodity prices meanwhile brought wealth to the powerful few and rapid inflation to everyone, creating hardship among the impoverished many across the continent. Poverty and hunger fuelled social tensions and socialist tendencies among the masses, fed the political instability that underlay the post-colonial republics, and prompted repressive reactions from many ruling oligarchies.

So neutral Latin American governments were juggling economic boom, a rising challenge from the masses and the looming juggernaut of US economic imperialism. They also faced constant diplomatic and propaganda pressure from the Entente, which was determined to cut off all trade to the Central Powers, and from Germany, which spent the next three years dangling unlikely carrots to encourage behaviour that might distract Washington from European affairs. Meanwhile a continuous chorus of demonstrations from European ethnic groups, for or against both sides, was increasingly trumped by more widespread popular demands for action, usually in response to attacks on Latin American shipping by German U-boats.

These were the parameters within which Latin American nations remained more or less solidly neutral until April 1917, when the US declaration of war against Germany, and Washington’s call for all American states to join the Allied side, forced them into some kind of repositioning.

You are here, 1917.

Of the four biggest Latin American economies, only Brazil reacted by joining the Allies, although it took loss of Brazilian lives to a U-boat attack and a consequent spike in popular anti-German sentiment to push the government beyond pro-Allied platitudes into a declaration of war in October 1917. In Mexico, a nationalist, anti-US regime remained neutral throughout the conflict, taking German money and fostering pro-German sentiment while wrestling with revolutionary turmoil, supplying the British Royal Navy with oil and almost daring Washington to intervene further in its internal affairs.

The Argentine government of President Irigoyen was equally hostile to the US, deaf to the pro-Allied sentiments of its British, French and Italian citizens, and focused on extracting maximum profit from trade with both sides. Irigoyen refused US requests for support after April 1917, and made an unsuccessful attempt to convene a conference of Latin American nations that would isolate Washington. Argentina finally agreed to sell surplus crops to the Allies in May 1918, but the government’s overtly nationalist position left the country diplomatically isolated in the War’s aftermath, albeit in credit for the first time in its history. Chile, the region’s other big player, pursued a similar line once it had satisfied Allied demands for use of German-owned nitrate output, and paid a high price for wartime profiteering when peace brought its boom to an end. Sudden mass poverty and unemployment fuelled a violent class struggle, and diplomatic isolation left it vulnerable to attacks from neighbours.

The neighbours in question were Bolivia and Peru. Elements of both societies were already enjoying unprecedented prosperity though trade with the Allies, and both followed the US lead in breaking relations with Germany in 1917. Partly motivated by popular outage at German submarine attacks, but largely by the (ultimately vain) hope that Washington would support their long-standing territorial claims on Chile. Uruguay also chose solidarity with the US in 1917, partly because it cherished good relations with Brazil, but also because Germans living in southern Brazil had long threatened to colonise Uruguay for the Fatherland, making Germany particularly unpopular in Montevideo.

The rest of Central America and the Caribbean were, on the whole, too close to the USA to have much choice about their support for Washington, and some of them – Cuba, Panama, Haiti, the modern Dominican Republic and Nicaragua – were either officially or unofficially under US control by 1917. Of those that remained fully independent, the government of Honduras eventually went to war in 1918, preferring US support to that of an influential German population that took its post-War revenge by sponsoring rebellion, while Guatemala’s dictatorial regime went to war as a means of grabbing massive German investments in the country for itself.

Further south, strict neutrality was a more a feasible option for small countries. Although German provocation and diplomatic clumsiness eventually drove Ecuador to declare war, Venezuela and Colombia maintained their neutrality until the end and traded with both sides, the latter in part motivated by lingering fury at US sponsorship of Panamanian independence. Paraguay, poor landlocked and comfortably controlled by a small European elite, was able to virtually ignore the War, remaining uncontroversially neutral and merely stating its broad support for whatever the US was doing.

That just leaves my excuse for this self-indulgent ramble, Costa Rica. Costa Rica had entered the twentieth century as it would enter the twenty-first, as an example of tranquil stability. It enjoyed a balanced economic relationship with Europe and the US, based on banana and coffee exports, and provided a calm, peaceful political environment for its 400,000 or so inhabitants – but it was undergoing an unusual period of political unrest during the First World War.

After a general election in 1913 had failed to produce an overall majority for any of the country’s three major parties, Alfredo Gonzales became president of the republic in May 1914. A compromise candidate, he introduced a raft of popular reforms and is now regarded as a founding father of Costa Rican democracy, but as loss of European markets plunged the country’s economy into crisis he was overthrown by a military coup in January 1917. The new regime of former war minister President Frederico Tinoco was anything but popular, and set about seeking support from the only nation in the world that could guarantee the survival of any Central American government, the USA.

Backed by the military, hated by everyone else, Tinoco didn’t last long.

It didn’t work, and Wilson’s administration refused to recognise Tinoco’s government. A blatantly rigged election didn’t help, and Washington ignored an offer to station military forces in Costa Rica as extra protection for the Panama Canal, so Tinoco broke diplomatic relations with Germany on 21 September in the hope of changing Wilson’s mind. That didn’t work either, but then again it didn’t do Costa Rica much harm, given that the country’s 600-strong standing army and its two naval gunboats saw no wartime action.

Costa Rica wasn’t invited to the post-War peace conference (and therefore didn’t sign the peace treaty, remaining technically at war with Germany until after the Second World War), and Washington supported the coup that overthrew Tinoco in August 1919. The next president lasted two weeks, but subsequent leaders had restored peaceful, stable democracy to the country by the early 1920s.

The varied Latin American responses to Washington’s declaration of war had one thing in common – a failure to cooperate. Apart from a fruitless joint meeting with US financial authorities in 1915, Latin American republics made no wartime attempt to meet geopolitical and economic pressures with a united front. Nobody can say if solidarity, even among a few leading nations, could have curtailed US political and economic influence, controlled economic instability or addressed mounting social unrest. It can be said that continent-wide pursuit of individual national interests – in many cases the very narrow interests of a ruling elite – exacerbated all of those problems, and that they all brought big trouble to Latin America for the rest of the twentieth century.